VW increases spending on electric, self-driving cars

BERLIN -- Volkswagen Group is boosting spending on technologies for electric and self driving cars, while increasing production of EVs in its German home market.

Investments in battery-powered vehicles, autonomous driving and related future technologies will rise to about 73 billion euros ($86 billion), or half the company's 150-billion euro budget through 2025, VW said in a statement.

That's up from 60 billion euros a year ago, or 40 percent of investments planned at the time.

The investment is part of VW Group's new five-year planning cycle, approved by the supervisory board on Friday.

The spending increase is based on the expectation that the global economy will grow moderately over the next five years, VW said.

The investment envisages production of about 26 million full-electric cars in Europe, China and the U.S. by 2030.

Some 19 million of these will be based on the automaker's Modular Electric Drive Toolkit (MEB), with most of the remaining seven million to use the high-performance PPE platform.

VW said it estimates production of around seven million hybrid vehicles over the same period.

Under the plan presented on Friday, VW is doubling its planned spending on digitalization to 27 billion euros, as it seeks to develop a seamless, software-based vehicle operating system.

This includes spending on the group's Car.Software organization launched earlier this year. The goal is to build a proprietary software stack, which will be deployed in Audi’s Artemis project to develop an advanced, self-driving electric vehicle by 2024.

The company's own share in software will increase to 60 percent from 10 percent, VW said.

In addition, a large share of the funds earmarked for digitalization will be invested in the mission-critical fields of artificial intelligence, autonomous driving and digitalization of significant business processes, the automaker said.

Jefferies analyst Philippe Houchois said while the overall investment budget had remained unchanged, VW's priorities had seen a "meaningful re-allocation to software and digitization and a continued priority on Germany."

VW will also invest in producing EVs and battery cells for electric cars in Germany.

Together with its Swedish joint venture partner Northvolt, the automaker will build a cell production facility in Salzgitter that will start operation in 2024.

VW's commercial vehicles division will produce the VW ID Buzz electric minivan in Hanover, along with three full-electric midsize SUVs for other group brands.

VW brand's plant in Emden will add production of the Aero full-electric midsize sedan in addition to the ID4 crossover.

The automaker's home plant in Wolfsburg will add an SUV targeting the European market from 2024. VW did not say if this model will be an EV.

Production of the VW Passat midsize car, currently built in Emden, will be moved to Bratislava, Slovakia, starting in 2023. 

The Passat will be built in Bratislava with its sister model, the Skoda Superb, whose production will shift there from Skoda's Kvasiny plant to free capacity for increasing production of the Kodiaq and Karoq SUVs.

Reuters and Bloomberg contributed to this report